Published 4:00 am, Friday, May 5, 2006

Cisco Systems Inc., with a market value of $133.3 billion, is back on top of The Chronicle 200.

Cisco, the San Jose networking company that makes the routers and switches often referred to as the plumbing of the Internet, held the top spot in the market capitalization rankings only once before, in 2000, when it had briefly surpassed General Electric as the world's most valuable company.

In nearly every other year of the past decade, Santa Clara chip-making giant Intel Corp. sat atop The Chronicle's annual list. But rival Advanced Micro Devices Inc. has gained ground and Intel has shown signs of faltering. Its stock dropped 20 percent and the company fell to fourth place, behind Chevron Corp. and newcomer Google Inc.

That makes Intel a relative rarity in the list of top companies: a tech company that lost market value.

More typically, technology led Bay Area companies to a strong year in the stock market. The total market capitalization of the companies on The Chronicle 200 list rose an impressive 23.2 percent, from $1.38 trillion in 2005 to $1.7 trillion this year.

Google gave that a big boost. The Mountain View search-engine company, which was not on the list last year, joined the ranks with a hefty $115.6 billion market cap, just ahead of Intel. That $115.6 billion accounts for more than one-third of the gains in the top 200.

"You could say that technology is really back," said John Girton, president of Girton Capital Management, a Larkspur money manager. He cited not only Google, but Apple Computer Inc., whose market cap soared 57.3 percent to $53 billion, thanks to iPod and iTunes sales.

"In the stock market, there's been a little bit of a shift toward growth stocks from value stocks in the past year," Girton said. "California has a lot of growth stocks. When the economy's growing, it makes sense that California stocks should do well," particularly those in Silicon Valley.

Tech dominates the top of the list, reflecting its status as the linchpin of the Bay Area economy. Fifteen of the top 20 companies have their basis in bits and bytes. In addition to Cisco, Intel and Google, the top 15 also includes Hewlett-Packard Co., Genentech Inc., Oracle Corp., eBay Inc., Apple, Yahoo Inc., Gilead Sciences Inc. and Applied Materials Inc.

Adobe Systems, Sun Microsystems, Symantec and Electronic Arts round out the tech companies in the top 20.

Biotech companies Genentech and Gilead had particularly strong years in the stock market. Genentech of South San Francisco saw its market cap rise 50.2 percent to $89 billion, ranking it seventh among The Chronicle 200. Gilead of Foster City is 12th on the list, rising 78 percent to a market cap of almost $29 billion.

But it's not all tech. The Bay Area has a long history as a financial capital, and some big money companies still rank high on the list of stocks. Wells Fargo & Co. is fifth on the list, joining Cisco, Chevron, Google and Intel as the only $100 billion heavyweights. Wells Fargo's market cap rose 5.7 percent last year to $107.1 billion.

The biggest percentage gainers tended to be smaller companies, mostly in the volatile tech sector. Finisar Corp. of Mountain View, with a market cap of $1.5 billion, soared 423 percent -- a nearly fivefold increase -- on the strength of its sales of optical components to Cisco. Even smaller Bookham Inc. of San Jose, another maker of optical components, was second with a 311 percent gain to a still relatively small $440 million market cap.

Top gainers include Google, whose 133.2 percent growth is more impressive because of its size; JDS Uniphase Corp. of San Jose, a telecommunications equipment company, whose capitalization rose 189 percent to nearly $7 billion; Netflix Inc. of Los Gatos, up 177 percent to $1.6 billion; and Salesforce.com Inc. of San Francisco, up 155 percent to $4 billion. Nvidia Corp., the Santa Clara chipmaker, rose 147 percent, to almost a $10 billion market cap.

Similarly, the biggest losers tended not to be big companies. At the top of the list, with its market cap falling 61 percent to $79 million, was Design Within Reach Inc., a San Francisco seller of home furnishings that has staved off Nasdaq delisting. Other retailers whose stock fell include Cost Plus Inc. (down 35 percent), Sharper Image Corp. (down 27 percent) and Gap Inc. (down 15 percent).

But most of the big losers were tech. Even Intel dropped nearly 21 percent and shed $145 million. It still is the fourth-largest company in the Bay Area.

According to FactSet, The Chronicle 200 index was up 19.8 percent for the 12 monts that ended March 31, outperforming other major indexes. "It's been a good year" for technology, said Gary Schlossberg, senior economist with Wells Capital Management in San Francisco, a unit of Wells Fargo. "To some extent, it was carried by the consumer sector, but business spending also gave it a lift."

In particular, businesses were looking to buy capital equipment that could help them run more efficiently. That typically translates into a boon for tech companies.

Like Cisco. "If you look at this company and you apply any set of normalized analysis to it, it's extraordinary," said Brian Hamilton, chief executive of ProfitCents, a North Carolina firm that uses artificial intelligence to examine financial statements.

Under the leadership of Chief Executive Officer John Chambers, Cisco has long been one of the most widely held stocks and most successful companies in Silicon Valley. Its market cap peaked at $560 billion in 2000 -- and even though it is only at a fraction of that today, revenue and earnings are higher, according to Samuel Wilson, a senior analyst with JMP Securities in San Francisco.

But in 2000, every business was rushing to the Internet and needed Cisco equipment to get there. When the dot-coms went bust, so did Cisco's business. The company wound up reneging on a long-held pledge not to lay anyone off, and its stock price fell dramatically.

The market also regained some rationality. In 2000, Wilson said, Cisco traded at 140 times estimates of future sales. That is down to a healthier 17.

Earnings have gone from 18 cents per share in 2000 to 26 cents per share, "and yet the stock is nowhere near its $80 highs," Wilson said. "It was a bubble. It was disco nights and bad trips. It was a looney-tune time."

Chambers managed the downturn well, Wilson said.

Yet the company has not quite returned to its status as a high-growth stock, he said, maturing instead into "a lumbering giant."

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